What’s a Prevailing Wage?
Prevailing wage is a rate of pay established for certain types of work in certain areas. It’s a concept similar to minimum wage but different in some key areas. It’s important to understand these differences, whether you are an employer or an employee.
In the United States, there are laws at both the federal and state level that dictate how much employees should be paid. At the federal level, the Fair Labour Standards Act (FLSA) sets out a minimum wage of $7.25 per hour, while state minimum wage rates often exceed this number. These laws apply to the vast majority of employees, no matter what industry they work in or the type of work they do.
Prevailing laws, on the other hand, are established by the Department of Labor and apply specifically to certain employees working in certain areas. Generally speaking, prevailing wage laws apply to contractors and subcontractors employed in constrution, building, or building services (such as gardening, cleaning, or security). Employees covered by the law have the right to a rate of pay in line with similar projects in a similar area. Prevailing wage rates are designed to stop employers undercutting the competition and underpaying their workers.
However, prevailaing wage rates do not aply to all contracts. With regards to federal projects, the law applies to any contract above $2000. With regards to state projects, each state dictates their own prevailing wage criteria. Twenty-four states do not apply prevailing wage laws to state projects, while the other twenty-six do. Below is a table showing each state’s prevailing wage criteria, including their dollar threshold: